Cotton import to go down

A big appreciation of the US dollar against the local currency along with a perennial inadequacy of gas pressure in supply lines have started to have a detrimental impact as cotton import is projected to be lower this year. 

Even in June last year, each US dollar was sold at Tk 91. It has now climbed to Tk 110 because of a shortage of dollars in the markets.

As a result, the import of many consumer goods has been affected as local importers have cut back on opening letters of credit (LCs).

At the end of the current marketing year of cotton in September, Bangladesh was supposed to import nine million bales of raw cotton, said Mohammad Ali Khokon, president of Bangladesh Textile Mills Association (BTMA).

But the amount will be around eight million bales, he told The Daily Star over the phone.

Currently, almost all spinning and weaving mills are running at just over 30 per cent capacity because of the inadequate pressure of gas at industrial units, he said.

The gas pressure is still low even though prices of the fossil fuel have been increased, he said, adding that unsold stocks of yarn were also gradually decreasing for a steady rise in demand.

Khokon's claim was substantiated by almost similar predictions of the United States Department of Agriculture (USDA).

For instance, the USDA in February said in the year 2022-23, Bangladesh may import 7.9 million bales of raw cotton whereas the previous prediction in January was 8 million bales.

A lower consumption of clothing items by western consumers because of high inflation stemming from the Russia-Ukraine war, which also lowered the appetite for fast fashion, has affected productivity at the factory level at the domestic front.

The USDA report also said the global production was projected to go down by 1 million bales to 114.4 million bales and largely attributable to lower yields.

Consumption is forecast down slightly from the previous month due to lower use in Pakistan, Indonesia, and Vietnam offsetting higher consumption in China.

Global trade is forecast down 1.2 million bales from the previous month, attributable to lower global consumption, including Bangladesh, Egypt, Indonesia, and Pakistan.

Ending stocks are down 850,000 bales.

The US balance sheet shows production and exports unchanged at 14.6 and 12 million bales respectively.

Ending stocks are forecast slightly higher relative to the previous month at 4.3 million bales. The projected US season-average farm price remains unchanged at 83 cents per pound, the USDA also said.